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December 2016

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January spot price of China's domestic cotton moderately increased following the trend in end-2009. Buying and selling process of spot cotton slowed down when entering into February, as textile enterprises gradually stopped buying cotton on the advent of Chinese traditional Spring Festival.

Some small-scale cotton trading enterprises garnered funds by delivering spot cotton at lower prices due to tight liquidity conditions, due to which spot cotton prices were weaker as a whole in February.

Domestic cotton price index CNCottonB cotton, representing cotton grade 328 in China stood at 15,005 Yuan / ton on February 26. Taking into account the factor that textile cotton mills did not hold a large quantity of cotton before the Spring Festival to avoid risks, their cotton stock generally may last only 20-25 days, which means they will start cotton purchase by mid-March.

It also should be noted that textile mills have started receiving deliveries of imported cotton under the previously announced one million tons of cotton quota under sliding tariff, along with which transportation of Xinjiang cotton to inland regions after the Spring Festival has improved.

This has led to an improvement in supply situation of spot cotton in inland regions, due to which the room for sharp rise of spot cotton price will be limited.